In the last two articles, I've talked about the environmental and (often invisible) social conditions that we consumers
influence with our everyday buying habits ("Shopping 101") and how to find everyday products with lower impacts ("Shopping 201"). I've received great feedback from readers on Shopping 101 so I'd like to look once more at a shopping topic that might be more appropriately called "non-shopping." What, you might ask, is non-shopping? Non-shopping is something Americans are not well known for-saving.
But first, a disclaimer: It seems a little strange to start one of my articles this way, but it is important that I make clear from the outset that I am not a financial advisor. And, it is definitely not my intention to tell you how to invest your life savings. Instead, I hope to inspire you by introducing a concept and pointing you toward resources that you might want to explore further with a skilled financial advisor.
How you handle your money can make a difference in the world ... perhaps an even greater difference than your shopping can ... so, let's explore that possibility.
MONEY AND SOCIAL CONSCIENCE
In the 1750s, the Quakers prohibited investing in the selling and buying of human slaves-a prohibition often pointed to as the forerunner of modern social consciousness in finance. Later, a Christian group in 1928 formalized a policy and the Pioneer Fund to avoid investment in "sins," taking that consciousness a step further.
Fast-forward to 1940, when a major oil company threw a party in New York City to celebrate Nazi Germany's victory over France and continued to ignore sanctions by selling oil to Germany. Upon publication of the information, public outrage and angry shareholders forced the company president to resign-a clear case of shareholder advocacy (more on this concept shortly).1
The activism of the 60s and 70s stirred protests against the Vietnam War, South African apartheid, women's lack of equality, and industrial pollution ... driving the concept of divestment as socially conscious investors objected to the use of their money to support behaviors contrary to their beliefs. Divestment, the opposite of investment, was seen as a way to stop those behaviors by cutting off the money and supplies that supported them, and making a public statement about the reasoning of that action. In 1971, the first socially conscious screened mutual fund, Pax World Fund, was established.
Today, the term Socially Responsible Investing (SRI) is the most recognized way to refer to the use of our savings to accomplish social good while achieving financial success. Other terms include mission investing, natural investing, ethical investing, cause-related investing, and numerous others that usually have similar (but not exactly the same) meanings. Since that original screened mutual fund in 1971, there now are approximately 260 socially and environmentally screened funds based in the United States, as of the end of 2007.
WHO AND WHAT, THEN HOW
Socially and environmentally aware investment programs were once merely a blip on the radar screen of investing, and were often pooh-poohed for having the perception of being associated with tree-huggers and hippies. Not true today. SRI assets have grown and diversified over the years, with different approaches and definitions. The Social Investment Forum (SIF), recognized as the trade association of the industry, promotes the concept and practice of SRI through extensive education, research, issue-related working groups, and advocacy programs. Thanks to SIF, we now have a better understanding of the expanding role of SRI in the United States. Its 2007 report2 indicates that:
Approximately 11 percent of investments under professional management are involved in SRI.
SRI assets have risen 324 percent, from $639 billion in 1995 to $2.71 trillion in 2007.
I have referred several times to investing as a means of promoting socially and environmentally responsible behaviors, but actually several strategies are available. Even if you aren't in a position to invest today, you can still have a positive impact. Perhaps the best known strategy is "screening," which is the evaluation of investment portfolios based on social and environmental criteria.3 The screening may be negative, i.e., ruling out investing in companies that have products and/or business practices that are harmful to employees, communities or the environment. Conversely, positive screening identifies companies that are having positive impacts so they are rewarded by inclusion. The screens (positive and negative) may involve some or all of the following issues and include some of the following products:
Human rights and workplace quality
Environment-pollution, global climate change and renewable energy
Labor-discrimination and exploitation
As in any prudent investing, the companies being screened can't just be "doing good," they must also be profitable. As for doing good, there has been debate in the SRI community about what qualifies as doing good and whether doing good in some areas makes up for doing poorly in others. No company is perfect; and sometimes those who've been "not good" in the past are recognized for being on the path to positive change.
Shareholder advocacy or activism involves the activities of investors, as shareholders, to influence the behavior and products of companies through dialogue with management and by filing shareholder resolutions. This technique of getting a company's attention has come a long way from the early Greenpeace events of hanging from smokestacks (with TV news cameras rolling). You must actually be an investor in order to take part in shareholder advocacy.
Community investing puts your money to work in a good way. Even if you can't afford to invest, you can do something as simple as opening a checking account in a bank that has a strong focus on community development. The bank needn't be in your own town (refer to the National Green Pages for lists of these banks, such as Shorebank) and the communities being helped may be in the United States or in developing countries. Small savings, money market accounts, and other smaller scale uses of your money can go a long way toward helping communities develop through aid to small businesses, health clinics, education, and housing. You don't have to be a major investor in order to do well by doing good. Your banking choice, for example, might encourage the development of organic cotton farms in India, with safe working conditions, so you can buy organic linens for your family and benefit society and the planet at the same time.
NOT WITHOUT CONTROVERSY
In 2004, Paul Hawken and the Natural Capital Institute released a report titled "Socially Responsible Investing: How the SRI Industry Failed to Respond to People Who Want to Invest With Conscience and What Can Be Done to Change It" (whew!). It took the SRI community to task for a number of issues, such as unclear terminology and the effectiveness and transparency of their screening methods. Various organizations fired back their responses. The debate was interesting and I think the result has been a stronger and more effective field of SRI. Hawken continues to engage in thoughtful commentary (pick up any of his books and prepare to be captivated) on social and environmental issues.
SO HOW DO YOU GET STARTED?
First, do some reading to gain a better sense of the possibilities. I highly recommend Co-op America's Web site and publications, the quarterly Greenmoney Journal, and the Web site/publications of the Social Investment Forum (see references). In addition, the Dow Jones Sustainability Indexes and the FTSE4Good Index series provide background information.
Second, get the prospectus for any investment you're considering, and get professional help-from a financial advisor-just as you would for any of your monetary investments. If you don't have one, or yours doesn't understand SRI, you can find many listings (and interesting articles and advice) in the National Green Pages or the membership list of SIF. "If every social investor in the United States put at least 1 percent of his or her managed assets in community investing, it would generate more than $10 billion for economically disadvantaged communities."4 Wow!
Your non-shopping habits can help to change the world while benefiting your financial health; not a bad deal, I'd say.
Keri Luly has elected to donate her monetary compensation for the articles she writes to an environmentally pro-active organization of her choosing. This issue, she has selected the Social Investment Forum (SIF)—the only national membership association dedicated to promoting the concept, practice, and growth of socially and environmentally responsible investing. Its members integrate economic, environmental, social and governance factors into their investment decisions. SIF provides programs and resources for media and public education, research, publications, and issue-related working groups to advance this work. To learn more, go to www.socialinvest.org.
| ||Keri Luly, LEED AP, is Allsteel's stewardship coordinator and regular contributor to EnvironDesign Notebook. She can be reached at firstname.lastname@example.org.|